United States District Court, D. Minnesota
Franck, Esq., Franck Law Office, counsel for Plaintiff.
Voss and James S. Alexander, Assistant United States
Attorneys, United States Attorney's Office, counsel for
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK United States District Judge
case involves a dispute arising from Defendant Centers for
Medicare & Medicaid Services' (“CMS”)
decision to suspend Medicare reimbursements to Plaintiff
Integrated Nursing & Health Services, Inc.
(“INHS”) after CMS concluded that there were
credible allegations of Medicare fraud. INHS has moved for a
temporary restraining order releasing the suspended payments.
CMS argues, among other things, that the Court lacks subject
matter jurisdiction. For the reasons discussed below, the
Court concludes that it lacks subject matter jurisdiction.
The Court therefore denies Plaintiff's Motion for
Temporary Restraining Order (Doc. No. 13) and dismisses
Plaintiff's Amended Complaint (Doc. No. 12 (“Am.
Compl.”)) without prejudice.
a Minnesota corporation that provides home-healthcare
services in mostly Hennepin County, Minnesota. (See
Am. Compl. ¶ 7.) INHS employs 17 people and provides
services to approximately 40 homebound patients. (Doc. No. 17
¶¶ 4-5.) CMS is a federal agency vested with
overseeing, among other things, the Medicare reimbursement
program. Here, CMS used AdvanceMed, a Medicare contractor, as
its main contact point between the parties.
to Medicare's regulations, CMS may suspend Medicare
reimbursements “in whole or in part” if it has
been “determined that a credible allegation of fraud
exists against a provider or supplier.” 42 C.F.R.
§ 405.371(a)(2). The suspension can occur with or
without prior notice. If, as here, the suspension occurs
without prior notice, CMS must still offer the healthcare
provider the opportunity to submit rebuttal information
“as to why the suspension should be removed.”
Id. § 405.372(b)(2). If CMS decides, however,
that despite the rebuttal evidence, the suspension will
continue, then the healthcare provider does not have a right
to appeal until a final determination on the fraud
allegations. See Id. §
January 31, 2017, AdvanceMed notified INHS by letter that CMS
had suspended Medicare reimbursements after receiving
credible allegations of Medicare fraud. (Doc. No. 12-1 (the
“Suspension Letter”).) The Suspension Letter
identified five examples of suspected submissions and stated
that while the investigation was ongoing, all of
Plaintiff's Medicare reimbursements would be reviewed and
withheld in an escrow account. The Suspension Letter also
stated that the suspension had been in place since January
24, 2017. The Suspension Letter gave the Plaintiff an
opportunity to reply, but also explained that the Plaintiff
had no right to appeal. (Id.)
February 6, 2017, Plaintiff replied essentially asking for
more details about the fraud allegations. (Doc. No. 12-2.)
Plaintiff also submitted documentation to authenticate the
allegedly fraudulent submissions identified in the Suspension
Letter. (Id.) AdvanceMed wrote back on February 24,
2017, stating that the suspension would continue based on
federal indictments alleging that INHS's owner Roylee
Belfrey was involved in a scheme to commit Medicare fraud.
(Doc. No. 12-3.) AdvanceMed also stated that CMS would not
review the documentation provided by Plaintiff because CMS
had reason to question the documents' accuracy given the
indictments. (Id.) The letter reiterated that the
decision to suspend payments was not appealable.
March 30, 2017, Plaintiff filed its Amended Complaint
alleging four claims that all essentially seek the same
remedy: an order releasing the escrowed payments. First,
Plaintiff seeks mandamus relief to release the suspended
payments based on CMS's refusal to review the
documentation supporting the allegedly fraudulent claims.
Second, Plaintiff alleges that it was defrauded by CMS when
CMS stated in the Suspension Letter that it would review
rebuttal documentation, but then refused to do so. As a
result of the fraud, INHS alleges that it has suffered $228,
000 in damages (the amount of the suspended payments). Third,
Plaintiff alleges that CMS breached an unidentified statutory
and fiduciary duty by failing to review the rebuttal
documents. And fourth, Plaintiff alleges that its
constitutional due-process and equal-protection rights were
violated when CMS did not undertake a proper review of the
April 4, 2017, Plaintiff moved for a temporary restraining
order requiring Defendant to release the suspended funds.
(Doc. No. 13.) Plaintiff argues that unless the suspended
funds are released, it will have to close. In its response,